How To Outsmart Student Loan Providers

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The first thing you should know about student loan providers is that they really don’t care about you and your financial well-being. They would actually prefer that you don’t pay them now so that either interest continues to grow (and you must pay more) or you’re late in paying and have to pay a late fee.

Once you understand that loan providers aren’t actually excited for you and your recent college degree, you will learn that you have to be an advocate for yourself: take copious notes of your interactions and still be kind but also firm.

In the last two years, Jacob and I have dealt A LOT with student loan providers. And if there’s one thing we’ve learned when interacting with student loan people, it’s that you have to be a true advocate for yourself. To become debt-free easier and quicker, here are some tips that you should use when dealing with student loan providers:

Set Up Automatic Payments

I have talked about this in a previous post, but it’s very important that you set up automatic payments on your student loans. You are going to be paying minimum payments anyway to stay current on your loan, and automatic payments will make this easier so you won’t have to worry about missing a payment. Setting up automatic payments usually decreases your interest rate by 0.25% anyway! So sign up for automatic payments for an interest rate deduction and never end up paying late fees.

After you set up your automatic payments, make sure it actually goes though! I have heard of people who set up payments but then it never gets withdrawn! Set a reminder in your phone to check your loan and bank account on the day that the loans are supposed to be deducted. If it doesn’t get withdrawn, reach out to your loan provider immediately to solve the situation. You do not want to make a late payment.

Learn To Play By Their Rules And Jump Through Their Hoops

Again, knowing that your loan provider isn’t looking out for you, you’ll have to keep good track of your loans. Your loan is probably made up of a bunch of smaller loans. Keep track of each individual loan amount and interest rate.

My federal loan is serviced through Nelnet. I did college in three years and have three individual unsubsidized Stafford loans through them. But to be tricky, Nelnet grouped these loans with intentionality (I’m not saying these people aren’t smart!). They grouped my first and third year loans together: the loan with the highest interest rate and the loan with the lowest interest rate (6.55% and 3.61%). And then my second year loan was by itself. They are put into “Group A” and “Group B” but there are 3 loans total. When I go in to make payments, Nelnet will only allow me to make a payment to the entire group. I would much rather make an additional payment to the loan with the 6.55% interest rate since all loans are about the same amount and this one is accruing more interest, but I wasn’t able to do it in the payment section.

I contacted Nelnet and asked how I could make a payment to loan 1 specifically and this is what they said: I had to make the payment, wait for it to be fully posted, and then contact them directly to ask if they could apply it to loan 1. Are you serious? It’s crazy how difficult they make it for you to pay them back! But I know that this is going to save me money so I followed the rules. This month I got to make my first large payment to Group A loans. So I made my payment and once it was posted, reached out to my provider to reallocate the funds to loan 1 only… Quite a silly hoop to jump through. With this being said, stay on top of your loans! They’re going to make it more difficult for you to pay. But do what you have to to play by the rules and save in the long run. Don’t give up just because they make it hard.

Know Where Your Extra Payments Are Going

It may be difficult to fully understand what’s happening when you make extra payments to your student loans. Loan providers want you to stay in debt as long as possible so that you can accrue as much interest as possible. So when you make an extra payment, you may notice that they call it a “pre-payment.” With my federal loan provider, Nelnet, they do exactly that. I made an extra $2,800 payment to one of the loans this month, and the dashboard of my loan now shows that I don’t owe them until July 2018! If your loan has you “pre-pay” and gives you a later payment date, don’t listen to it. Just keep paying every month and stay on track.

Also, make sure that your additional payments are going to principle and not pre-paid interest. You can see this in the payment section of your loan. It should break down every payment by principle and interest for you. Paying principle will help pay down that loan faster. If you need to, reach out and talk to someone at the loan provider company so that you can ensure your payment is going to the right place.

In Conclusion: Be An Advocate For Yourself

If you remember one thing when dealing with student loan providers, remember that they do not have your best interest at heart. This means that you need to do your part and communicate with them to the best of your ability. Make sure that they are charging you correct amounts, applying it to the necessary loans and withdrawing your automatic payments on time. Doing all of these things will make debt payments be less stressful and save you money in interest!

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About Marissa

Welcome! My name is Marissa and I'm a 20-something wife from Portland, Oregon with a passion for all things budgeting and personal finance. Whether you're trying to pay off debt, find a side hustle, or want to make wise financial decisions along the way, you're sure to learn about it here. Thanks for being a reader of The Budgeting Wife!